Justia White Collar Crime Opinion SummariesArticles Posted in California Courts of Appeal
California v. Shelly
Defendant Laura Shelly pled no contest to one count of embezzlement by an employee. Pursuant to the negotiated plea, the trial court imposed a five-year term of felony probation. The court also ordered defendant to pay $72,972.47 in restitution. Shelly argued on appeal the length of her probation had to be reduced in light of Assembly Bill No. 1950 (2019-2020 Reg. Sess.) which reduced the maximum length of felony probation to two or three years. She also argued the amount of restitution had to be reduced by $5,816.25. The Court of Appeal agreed, and the State conceded, that Assembly Bill 1950 applied retroactively and entitled defendant to have the length of her probation reduced. The question remaining was whether the State was then entitled to withdraw from the plea agreement. To this, the Court held it was not. The Court also reduced the restitution order by $1,000. View "California v. Shelly" on Justia Law
People v. Miller
Sara, an elderly woman, owned the property and resided there with her husband, who has dementia. San Mateo County informed Sara that she owed taxes and faced foreclosure. Miller, a real estate salesperson, contacted Sara and offered to secure a reverse mortgage to pay Sara’s tax obligation. Miller provided Sara with a document to sign. Sara believed the document was to secure a $500,000 reverse mortgage and that after she signed, Miller would pay the taxes. Sara did not read the document but signed it. The document was actually a purchase agreement. A deed transferring the property to Rex was recorded the same day. The District Attorney’s Office notified Sara of the sale. Lion had purchased the property from Rex. Miller pled no contest to unlawfully and knowingly procuring and offering a false or forged instrument to be filed in a state public office and grand theft of the property. Lion filed a quiet title action.The state moved to void the deed to Rex. The court determined the deed was forged and that the matter was appropriately addressed in the criminal proceeding. The court of appeal affirmed the adjudication of the deed as void from its inception, rejecting arguments that Miller’s no contest plea “was not an adjudication of the alleged falsity or forgery” of the deed, that the finding was not supported by the record, and the court should have deferred to the pending quiet title action. View "People v. Miller" on Justia Law
People v. Czirban
In July 2016, Reagan was killed while he was operating Czirban’s bulldozer in aid of the California Department of Forestry and Fire Protection at a Monterey County wildfire. An investigation revealed that Czirban did not have workers’ compensation insurance. The trial court convicted Czirban of procuring or offering a false or forged instrument, tax evasion, failure to collect, account for, or pay taxes, and misdemeanor failure to secure payment of workers’ compensation insurance. The court suspended the imposition of sentence, placed Czirban on felony probation for three years, and reserved the issue of restitution. Czirban appealed the conviction. While that appeal was pending, the court ordered Czirban to pay, as a condition of his probation, victim restitution of $70,667.56 to Reagan’s partner, Morgan, the mother of their two children (Pen. Code 1237(b)).The court of appeal affirmed in part, rejecting Czirban’s arguments that the trial court improperly awarded restitution for attorney fees because the award rests on a violation of the Workers’ Compensation Act related to a survivors’ benefit paid to Morgan by the state and that the restitution award is invalid as a probation condition because the attorney fees lacked a rational nexus to his misconduct, were excessive, and were unreasonably calculated. The court reversed the award of $22,485.13 in interest as calculated from the wrong date. View "People v. Czirban" on Justia Law
Williams v. Nat. W. Life Ins. Co.
National Western Life Insurance Company (NWL) appealed after it was held liable for negligence and elder abuse arising from an NWL annuity sold to Barney Williams by Victor Pantaleoni. In 2016, Williams contacted Pantaleoni to revise a living trust after the death of Williams’ wife, but Pantaleoni sold him a $100,000 NWL annuity. When Williams returned the annuity to NWL during a 30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL charged a $14,949.91 surrender penalty. The jury awarded Williams damages against NWL, including punitive damages totaling almost $3 million. In the Court of Appeal's prior opinion reversing the judgment, the Court concluded Pantaleoni was an independent agent who sold annuities for multiple insurance companies and had no authority to bind NWL. The Court determined that Pantaleoni was an agent for Williams, not NWL. The California Supreme Court vacated that decision and remanded, asking the appeals court to reconsider its finding that Pantaleoni did not have an agency relationship with National Western Life Insurance Company in light of Insurance Code sections 32, 101, 1662, 1704 and 1704.5 and O’Riordan v. Federal Kemper Life Assurance Company, 36 Cal.4th 281, 288 (2005). Upon remand, the Court of Appeal affirmed the judgment finding NWL liable for negligence and financial elder abuse. However, punitive damages assessed against NWL were reversed. The Court found no abuse of discretion in the trial court’s calculation of the attorney fee award, but remanded the case for the court to reconsider the award in light of the reversal of punitive damages. View "Williams v. Nat. W. Life Ins. Co." on Justia Law
Banerjee v. Super. Ct.
Following a preliminary hearing, petitioner Dr. Sanjoy Banerjee was charged in an information with two counts of presenting a false or fraudulent health care claim to an insurer (a form of insurance fraud, counts 1-2), and three counts of perjury (counts 3-5). The superior court denied Banerjee’s motion to dismiss the information as unsupported by reasonable or probable cause. Banerjee petitioned for a writ of prohibition to direct the superior court to vacate its order denying his Penal Code section 995 motion and to issue an order setting aside the information. The Court of Appeal issued an order to show cause and an order staying further proceedings on the information, pending the Court's resolution of the merits of Banerjee’s petition. The State filed a return, and Banerjee filed a traverse. The State argued the evidence supported a strong suspicion that Banerjee committed two counts of insurance fraud and three counts of perjury, based on his violations of Labor Code section 139.3(a) between 2014 and 2016. During that period, Banerjee billed a workers’ compensation insurer for services he rendered to patients through his professional corporation and through two other legal entities he owned and controlled. The insurance fraud charges are based on Banerjee’s 2014-2016 billings to the insurer through the two other entities. The perjury charges were based on three instances in which Banerjee signed doctor’s reports, certifying under penalty of perjury that he had not violated “section 139.3.” Banerjee argued: (1) the evidence showed he did not violate the statute's referral prohibition; (2) even if he did not comply with section 139.3(e), the “physician’s office” exception to the referral prohibition applied to all of his referrals to his two other legal entities; and (3) the patient disclosure requirement of section 139.3(e), the referral prohibition of section 139.3(a), and the physician’s office exception to the referral prohibition were unconstitutionally vague. The Court of Appeal concluded: (1) Banerjee did not violate section 139.3(a) by referring his patients to his two other legal entities; and (2) the evidence supported a strong suspicion that Banerjee specifically intended to present false and fraudulent claims for health care benefits, in violation of Penal Code section 550(a)(6), by billing the workers’ compensation insurer substantially higher amounts through his two other legal entities than he previously and customarily billed the insurer for the same services he formerly rendered through his professional corporation and his former group practice. Thus, the Court granted the writ as to the perjury charges but denied it as to the insurance fraud charges. View "Banerjee v. Super. Ct." on Justia Law
People v. Dawson
Dawson, the City Manager of Del Rey Oaks, purchased the Portola lot, “the last vacant lot” in the City. It had a water meter but no water credits and could not be built upon without water credits. The prior owner had never been able to obtain water rights or water credits. The City lacked any water credits and had no surplus water. In 2015, the City leased the Rosita property, part of Work Memorial Park, to Mori for a garden center. Dawson contracted on behalf of the City for a new well on the Rosita property and arranged for the water credit from the Rosita property to be transferred to Dawson’s Portola lot. Dawson never reported his ownership of the Portola lot on his Form 700 disclosure.Dawson was convicted of a felony count of violating Government Code section 10901 (conflict of interest as to a contract entered into in his official capacity) and a misdemeanor count of violating section 91000 (failing to report an interest in real property under the Political Reform Act). The court granted him probation. The court of appeal affirmed. The prosecution was not required to prove the inapplicability of an exception to section 1090 “for remote or minimal interests” because it was an affirmative defense; Dawson bore the burden of raising a reasonable doubt. View "People v. Dawson" on Justia Law
Meridian Financial etc. v. Phan
Mark Yazdani was the president and sole owner of Meridian Financial Services, Inc. (Meridian). Over the span of a year, Yazdani made a series of investments totaling $5,079,000 in an international gold-trading scheme run by a loan broker, Lananh Phan, who promised him “guaranteed” returns of 5 or 6 percent per month. It turned out to be a Ponzi scheme and when it collapsed, Yazdani lost most of his money. In exchange for some of his investments, Yazdani demanded “collateral” from Phan, in the form of "loans" or promissory notes secured by deeds of trust in favor of Meridian on Phan's residence, and the residences of unwitting third parties ensared in Phan's scheme. The loans were facilitated through escrow at Chicago Title Company. The purported borrowers never knew of these transactions; their signatures on the Meridian deeds of trusts were forged or obtained by Phan under false pretenses. After the Ponzi scheme collapsed and unable to recover his investment, Yazdani moved to foreclose on the purported borrowers. In one of two lawsuits, two of the purported borrowers sued Yazdani and Meridian (collectively, Appellants) to prevent foreclosure of and quiet title to their home. A judge cancelled the Meridian deeds of trust, finding that they were “forged” and that Appellants had acted with unclean hands in procuring them (the Orange County decision). In this, the second lawsuit, Appellants sued Chicago Title, among others, alleging they were induced to invest with Phan because Chicago Title’s involvement in the transactions reassured them that Phan’s investment scheme was legitimate. Appellants also sued more than 50 individuals who allegedly received payments from Phan, asserting they were Phan’s creditors, and the transfers of money to the individuals should have been set aside. Summary judgment was entered in favor of Chicago Title and the individuals. Appellants appealed both judgments, contending the trial court erred in giving preclusive effect to the Orange County decision. They also argued the award of attorney fees was grossly excessive and an abuse of discretion. Finding no merit to these contentions, the Court of Appeal affirmed the judgments and the fee award. View "Meridian Financial etc. v. Phan" on Justia Law
Meridian Financial etc. v. Phan
Mark Yazdani was the president and sole owner of Meridian Financial Services, Inc. (Meridian). Over the span of a year, Yazdani made a series of investments in an international gold-trading scheme run by a loan broker, Lananh Phan, who promised him “guaranteed” returns of 5 or 6 percent per month. It turned out to be a Ponzi scheme and when it collapsed, Yazdani lost most of his money. In exchange for some of his investments, Yazdani demanded “collateral” from Phan, in the form of "loans" or promissory notes secured by deeds of trust in favor of Meridian on Phan's residence, and the residences of unwitting third parties ensared in Phan's scheme. The loans were facilitated through escrow at Chicago Title Company. The purported borrowers never knew of these transactions; their signatures on the Meridian deeds of trusts were forged or obtained by Phan under false pretenses. Yazdani had been made aware of “irregularities” with the execution and notarization of the Meridian deeds of trust. Yazdani moved to foreclose on the purported borrowers. In one of two lawsuits, two of the purported borrowers sued Yazdani and Meridian (collectively, Appellants) to prevent foreclosure of and quiet title to their home. A judge cancelled the Meridian deeds of trust, finding that they were “forged” and that Appellants had acted with unclean hands in procuring them (the Orange County decision). However, the parties later settled and, as a condition of settlement, obtained a stipulated order from a different judge vacating most of the trial judge’s decision. In this, the second lawsuit, Appellants sued Chicago Title, among others, alleging they were induced to invest with Phan because Chicago Title’s involvement in the transactions reassured them that Phan’s investment scheme was legitimate. Appellants also sued more than 50 individuals who allegedly received payments from Phan, asserting they were Phan’s creditors and the transfers of money to the individuals should be set aside. Summary judgment was entered in favor of Chicago Title and the individuals. Appellants appealed both judgments, contending the trial court erred in giving preclusive effect to the Orange County decision. They also argued the award of attorney fees was an abuse of discretion. Finding no merit to these contentions, the Court of Appeal affirmed the judgments and the fee award. View "Meridian Financial etc. v. Phan" on Justia Law
Severin Mobile Towing, Inc. v. JPMorgan Chase etc.
Over the course of a few years, an employee of Severin Mobile Towing Inc. (Severin) took about $157,000 in checks made payable to Severin’s d/b/a, endorsed them with what appears to be his own name or initials, and deposited them into his personal account at JPMorgan Chase Bank N.A. (Chase). Because the employee deposited all the checks at automated teller machines (ATM’s), and because each check was under $1,500, Chase accepted each check without “human review.” When Severin eventually discovered the embezzlement, it sued Chase for negligence and conversion under California’s version of the Uniform Commercial Code (UCC), and for violating the unfair competition law. Severin moved for summary judgment on its conversion cause of action, and Chase moved for summary judgment of all of Severin’s claims, asserting affirmative defenses under the UCC, and that claims as to 34 of the 211 stolen checks were time- barred. The trial court granted Chase’s motion on statute of limitations and California Uniform Commercial Law section 3405 grounds; the court did not reach UCL section 3406. The court denied Severin’s motion as moot, and entered judgment for Chase. On appeal, Severin argued only that the court erred in granting summary judgment to Chase on Severin’s conversion cause of action (and, by extension, the derivative UCL cause of action). Specifically, Severin argued the court erroneously granted summary judgment under section 3405 because Chase failed to meet its burden of establishing that Severin’s employee fraudulently indorsed the stolen checks in a manner “purporting to be that of [his] employer.” Severin further argued factual disputes about its reasonableness in supervising its employee precluded summary judgment under section 3406. The Court of Appeal agreed with Severin in both respects, and therefore did not reach the merits of Chase’s claim that its automated deposit procedures satisfied the applicable ordinary care standard. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Severin Mobile Towing, Inc. v. JPMorgan Chase etc." on Justia Law
Gateway Bank, F.S.B. v. Metaxas
Metaxas was the president and CEO of Gateway Bank in 2008, during the financial crisis. Federal regulators categorized Gateway as a “troubled institution.” Gateway tried to raise capital and deal with its troubled assets. Certain transactions resulted in a lengthy investigation. The U.S. Attorney became involved. Metaxas was indicted. In 2015, she pleaded guilty to conspiracy to commit bank fraud. Gateway sued Metaxas based on two transactions involving Ideal Mortgage: a March 2009 $3.65 million working capital loan and a November 2009 $757,000 wire transfer. A court-appointed referee awarded Gateway $250,000 in tort-of-another damages arising from “the fallout” from the first transaction, and $132,000 in damages for the second.The court of appeal affirmed, rejecting arguments that the first transaction resulted in “substantial benefit” to Gateway and that Metaxas had no alternative but to approve the wire transfer. Gateway did not ask for any purported “benefit.” The evidence showed that the Board would not have approved either the toxic asset sale or the working capital loan if Metaxas had disclosed the true facts. Metaxas damaged Gateway’s reputation. Metaxas knew that the government was trying to shut Ideal down but approved the wire transfer on the last business day before Ideal was shut down, by expressly, angrily, overruling the CFO. View "Gateway Bank, F.S.B. v. Metaxas" on Justia Law